Saturday, May 12, 2012

Don't insult Hougang

It will be difficult for PAP to win Hougang, after treating the residents unfairly for two decades. The residents have learned to live with the hardship imposed by the PAP.

A better strategy for the PAP is to treat all people fairly and justly over the next two decades, and to win over the trust that was lost.

Restore the role of engineers

The standard of engineering had dropped in the past two decades, as trained engineers found it more lucrative to be insurance agents, property agents and other jobs in the financial sector. This has resulted in a drop in the standard of maintenance in our MRT system. Read this letter

I suspect that the same factor could be responsible for our flooding problem in Orchard Road. I wonder when will our Government wake up to this long term harm that is being done to our economy and infrastructure.

Rhetoric and culture

Rhetoric means to say something that sounds nice, or, as defined in a Wikipedia article,  "attempt to inform, persuade, or motivate particular audiences in specific situations."

The culture in an organization is driven by an internal set of beliefs and values that guide the action of its employees.

I have seen many organizations express rhetorically about their adherence to "corporate social responsibility". When you look into the actual behavior of the organization, they are greedy and seek to maximize their profits, even at the expense of fair treatment of their customers. The amount that they spent on charity is minuscule, as compared to their profit, but they want to give nice media statements, which are actually hollow.

MOH gives a distracting reply on Eldershield

not the sole means of funding long-term care of seniors

WHILE ElderShield is an integral part
of the funding system for long-term care of the elderly,
it is not the sole means of paying for such care
('ElderShield payout inadequate' by Mr Tan Kin Lian; last Saturday).

Bey Mui Leng (Ms), Director, Corporate Communications
Ministry of Health

Facebook c0-founder now lives in Singapore

Canadian experience in providing a minimum income to the poor

Dear Mr Tan,

Just saw in your blog that you are observing the new Malaysian minimum wage, especially in relation to the corresponding debate in Sg. 

A friend shared with me something interesting from Canada.

In the 70s they did an experiment to see what happens if they give a guaranteed income to people. This is different from minimum wage, in this scheme everyone gets an additional amount of money directly that will bring them above the poverty line, if they are below the line, regardless of whether they are working.

Some of the main results are:
1) People continued working, except for new mothers and teenagers. However, new mothers not working brings about the positive effect of more time with children. And teenagers not working brings about the positive effect of higher graduation rates. 
2) Hospitalization decreased significantly. 

Wikipedia article:

Friday, May 11, 2012

Risky systems, dire consequences

Lucky Tan explained that it is risky to take a 6 figure car loan or a 30 year mortgage loan. We have to study what happened in other countries and learn from their experience.

Consumers who deserve to be ripped off

I have often been asked to give my views on whether a specific life insurance policy is worth buying. It is quite inconsiderate for consumers to ask this question to me, and I often feel like telling them off.

If they take the trouble to attend the talk on Financial Planning and spend $30 and 3 hours, they will get to know why most of these policies should be avoided, and more importantly, what are the better ways to invest their savings.

A typical example that I have quoted many times is as follows:

If you save $500 a month over 35 years and earn an yield of 2.5% per annum on the life insurance policy, you will get around $300,000 as cash value at the end of the period. If you invest the same money in an exchange traded fund that is invested according to the Straits Times Index, you are likely to get about $500,000.

By investing in the life insurance policy, you will be giving away $200,000. You can get an accident or term insurance policy to cover $300,000 by paying an annual premium of $360 or less. Over 35 years, you will spend only $40,000 (including interest lost), but you can save $200,000.

The consumer should ask the insurance agent to tell them about the distribution cost of the policy. This is shown in the benefit illustration and could be $10,000 or more. This is the money that is taken away from the consumer to pay commission to the agent and other parties in the distribution chain.

 Here is the irony. If the consumer buys the insurance policy from the insurance agent, he (or she) is giving away $10,000 for a bad investment product. The consumer now wants me to spend the time to explain why they should not buy the policy, and experts to get it for free.

Sometimes, I recommended to the consumer to approach a fee-based financial adviser (and I gave a list of people that they can contact). But, in most cases, the consumer does not want to spend $200 or so, to pay the adviser.

Do you think that our consumers deserved to be ripped off, for being lazy and for being ungrateful?

Consumer can attend the talk on financial planning organized by FISCA, and other talks on investments by registering at

They can buy my book on financial planning and life insurance at

They can get the advice from a fee-based financial adviser here: (Click on FISCA Assistance category)

They can also give away $200,000 by buying a bad life insurance policy. They do not need to spend $30 (for the talk) or $200 for the fee-based advice.

Tan Kin Lian

Charges for writing a standard will

If you wish to know how much a lawyer charge for writing a standard will, and which lawyer offer this service at a low fee, login to (the information is available only to FISCA members after login).

Big time gamblers

It is sad to see banks continuing to gamble on a big scale. They should be banned from all types of gambling - or what is called by the nicer term of "trading".

Thursday, May 10, 2012

Singapore can learn from Hainan

Hainan used to send their top officials to learn from Singapore. Now, it is time for Singapore to learn from Hainan on how to deal with the big income gap.

A democratic society based on justice and equality

Please attend this event in Hong Lim Park on 19 May.

MARUAH is commemorating the "25th Anniversary of Operation Spectrum", an outdoor exhibition themed - That We May Dream Again. Remembering the 1987 ‘Marxist Conspiracy’ - will be held from 3pm to 7pm on Saturday 19th May, 2012 at Speakers’ Corner, Hong Lim Park.

MAS relax rule on some financial products

It is likely that investment in some exchange traded funds, such as the STI ETF that has been recommended by me, will be allowed in a few months time, without the need for the investor to pass a knowledge test. This is classified as "collective investment scheme: mentioned in this report. However, we still have to wait for the details to confirm the actual situation.

Wednesday, May 09, 2012

Common sense solutions

It is quite common for Singaporeans to develop a convoluted approach when a common sense approach would be more appropriate. Here is an example, as seen from a foreigner.

Blue Chip Shares and REITS in Singapore - May 2012

I have uploaded the fundamental data on the top 25 blue chip shares and 15 REITS in Singapore, sorted by dividend yield into the FISCA website (available to members after login). I am surprised that many of these shares have quite attractive dividend yields that are higher tahn 4% p.a.
FISCA website:

Tuesday, May 08, 2012

A country of extremes

BloggerEddy Blaxell said...
This is a fabulous article. One of the hardest-hitting pieces I've read about the current state of Singapore and the incredibly absurdities within it. What makes it all the more amazing is that you hardly needed to say anything at all - the facts speak for themselves.

Singapore : A country of Extremes

Business lessons form the Godfather

Hi Tan,
 We just posted an article, “The 9 Best Business Lessons From The Godfather”( I thought I'd drop a quick line and let you know in case you thought it was something your audience would be interested in reading.

Progressive Tax Rates

I agree with the views expressed by Calvin Cheng in this letter published in the Straits Times. We need the higher income earners to pay more tax, so that the state has sufficient money to take care of the poorer sections of our society.

At the same time, we should also introduce a minimum wage. Although the small business owners may find it difficult to cope initially, they can adjust. Eventually, rental rates have to come down, when their profits are squeezed.

Remembering the 1987 "Marxist Conspiracy"

Mr Tan
I have taken the excerpt from this website:
Please post into your blog
"“Operation Spectrum” was mounted by the Singapore government on 21 May 1987 under the ISA. Sixteen individuals were arrested in the first wave, with another six detained soon after. Two of the lawyers (including a former Solicitor-General of Singapore) who represented these individuals were subsequently detained as well. The 24 arrested were mainly professionals such as lawyers, journalists, community and church workers and entrepreneurs.
The government alleged that the detainees were ‘Marxist conspirators’, without giving them the right of defence in an open court. Instead, public “confessions” were elicited under the threat of indefinite detention without trial. 
These “confessions” were repudiated in a press statement by nine of these individuals some months after their release.  Eight of them were immediately re-arrested the next day, while the ninth signatory was in England at the time of re-arrest. 
Nothing substantial or credible was ever produced to corroborate the government’s allegations. Later documents showed even greater ambiguity in the reasons behind the detentions in 1987. An injustice was perpetuated and continues to linger to this day. 
Function 8 Limited and MARUAH as well as other civil society organisations, have come together as partners to remember the 25th anniversary of Operation Spectrum through a series of activities.
A session themed That We May Dream Again. Remembering the 1987 “Marxist Conspiracy” will be held from 3pm to 7pm on Saturday 19th May, 2012 at Speakers’ Corner, Hong Lim Park.
Amongst other activities, survivors of the 1987 ‘Marxist Conspiracy’ will be sharing  stories of their lives before and after their detentions with members of the public."

Watch this Youtube


Suggestions to improve Eldershield

1 May 2012

Editor, Forum Page
Straits Times

Elderhield is the long term care insurance promoted by the Ministry of Health. It now provides a monthly payout of $400 for up to 72 months, to an insured person who has been medically assessed to be unable to perform at least three out of 6 specified activities of daily living.

The monthly payout of $400 is clearly in adequate to meet the cost of employing a care giver at home or to put the elderly in a nursing home.

The Minister of Health said that he is going to review the current scheme. I wish to suggest the following points for his consideration:

a) The Ministry should continue to play an active part in setting the framework to ensure for the fair treatment of  consumers and for the fair assessment of eligibility for a payout. The claim payout rate, compared to the ctuarial estimate, should be published.

b)  The Ministry should carry out regular audits to ensure that the insurance companies are pricing the insurance product fairly and are not making excessive profits by over-charging the consumers, or are reckless in under-pricing their product, leading to the prospect of insolvency.

c) The Government should consider giving a fiscal incentive to encourage the public to increase the amount of coverage on a voluntary basis. This can take the form of (say) a 30% subsidy on the cost of the long term care insurance. If consumers need to pay only 70% of the actual cost, more people are likely to come forward to buy the supplementary insurance and encourage insurance companies to compete for this attractive market.

In many countries, the Government has found that some form of tax or fiscal incentives is helpful to develop the insurance market and to overcome the resistance of consumers to set aside money for their future needs. Singapore should follow the experience of these countries, in order to get our citizens to plan for their future needs.

Tan Kin Lian

Educational Talks by FISCA

Hi Mr. Tan,
I am your loyal reader. just want to ask if theres any platform that we can track on your retirement talks on investment and managing money. thanks! (;


You can track here

Poor return from life insurance policy

4 May 2012 

Forum Page
Straits Times

I refer to the letter by Ms. Pearlyn Koh. It is quite improper for her to describe my views as being over-simplistic.

Ms. Koh mentioned that the cash value of a traditional life insurance policy may be "a life saver" when a policyholder needs cash for certain emergencies. 

She must have assumed that the policyholders are not able to invest the savings in other suitable forms of investment and that life insurance is the only available choice. This is a bad assumption. 

A typical life insurance policy reduces the yield by 2% to 3% compared to the yield that the policyholder could have earned when the savings are invested in a more suitable investment plan, such as a low cost, well diversified investment fund.

Over a period of 35 years, a reduction of 2.5% in the yield could mean that the life insurance policy pays 40% less than the alternative investment plan. Instead of getting a payout of (say) $500,000, the cash value from a life insurance policy could be 40% or $200,000 lower. This is a lot of money to give away. 

Too many policyholders are getting a poor return on their life insurance savings and are not having sufficient money for their retirement needs, in spite of being prudent in saving for their retirement.

While the life insurance policy does give a higher payout if death occurs in the earlier years of the policy, this risk of premature death could be covered under a term insurance or accident insurance policy at a much lower cost to the policyholder.

A large part of the reduced payout from a life insurance policy represents the high commission paid to the life insurance agent and the agency managers and the profits of the life insurance company. 

Due to the conflict of interest faced by life insurance agents selling high commission products, it is not possible for consumers to rely on the advice of the agents. I recognize that some life insurance agents do act professionally in the interest of their clients, but the risk of consumers being misled by unethical agents is real and should be addressed. 

This is the reason why the it is timely for the Monetary Authority of Singapore to set up the Financial Industry Industry Review (FAIR) panel.

Tan Kin Lian
Financial Services Consumer Assocation

Monday, May 07, 2012

Difficult to make an internet banking payment

I used DBS IDEAL (corporate e-banking) to make a payment to a payee with a UOB Bank Account. I had to find out the bank which is 7375 and account number 101-XXXXXXX. I was asked to enter the bank code and branch code, which I assumed to be 7375-101. The DBS IDEAL system rejected it saying that this combination is invalid. I checked and tried again and was rejected.

My staff called DBS who replied that it is an issue with UOB. So, I decided to abandon the internet payment and wrote a cheque. Later, my staff called the client and found that the branch should be 001.

Why should our internet banking system to be so complicated. Surely, they should just accept the bank code and account code and pass the details of the transaction to the payee's bank to sort out internally on its branch code?

In the meantime, I will ask the payee to give me the full code for the bank (4 digits), branch (3 digits) and the account code (number of digits vary according to each bank). It is important for our banking system to sort out the complications and make it easy for businesses to make internet banking payment.

Exempt safe, indexed ETFs from new rules

Published in Straits Times Forum, 26 January 2012 

NEW regulations require consumers to get appropriate investment advice before investing in financial products that carry higher risks, such as structured products and investment funds.
However, they have the unintended consequence of preventing the online purchase of certain indexed exchange traded funds (ETFs) that are suitable for long-term investment. It is ironic that investors are allowed to make online purchase of individual stocks but are disallowed from investing in ETFs that allow them to diversify their risk over a number of blue chip companies that comprise the stock market index.
I recognise that some ETFs are invested in financial derivatives or are leveraged and are not suitable for investors who are not aware or not properly advised about the risks. But these risks do not apply to non-leveraged ETFs invested directly in the component shares of the stock market index. A few ETFs quoted in the Singapore Exchange meet this criterion and are safer than investing in individual stocks.
I suggest that the Monetary Authority of Singapore exempt the non-leveraged, indexed ETFs from the need to receive appropriate advice.
Tan Kin Lian
Financial Services Consumer Association

Sunday, May 06, 2012

Integration of immigrants

If France finds that they have too many immigrants and cannot integrate them, how about Singapore? We face a bigger challenge!

Can someone help me to find the proportion of immigrants in France and in Singapore?

Priorities @ Retirement - Photos

Early comers had a seat

Late comers had  to stand
About 100 people attended my talk on 5 May. There is not enough room, so many participants had to stand.

The next talk will be held today at 3 pm, Suntec City - SPH Life Matters.

I covered 3 topics
- invest retirement savings
- cope with rising cost of health care
- prepare to depart from this world

In the Q&A, the participants asked about investments, insurance and wills.

Taking a bus

I have to go to Suntec City to give a talk this afternoon. I decided not to drive there. I search the app "" and was surprised that there is a direct bus that takes 20 mins, excluding walking and waiting time, to my destination. This is more convenient that driving and finding a place to park the car. The app is available at Apple Store for only $0.99. If more people are able to find a convenient way to take a bus, this is possible the best form of transport - better than driving a car or taking the MRT.

How doctors die

Many people are worried about the high cost of health care, when they grow old. They hear stories about how expensive medical treatment can be.

This article explains how doctors approach this question. When they get very sick, they decide whether or not to go for treatment. If the chance of survival is small, they prefer not to be treated.

If the elderly patient does not waste money on futile treatment, the expenses can be much lower.

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